The Demotech Difference had the opportunity to speak to Rick J. Lindsey, who for the past three decades has led Prime Insurance Company and before it, Prime Insurance Syndicate. Before Prime Insurance Company, Lindsey rose through the ranks while working in nearly every imaginable insurance industry job. As an entrepreneur, specialty lines underwriter, claims specialist, risk manager, and a licensed surplus lines broker, Rick Lindsey is highly skilled in all levels of leadership and execution. He started Prime Insurance Company and became the newly formed entity’s CEO. Rick has enabled his company to fill a void in the market.
The Demotech Difference (TDD): Thank you for agreeing to speak with us. To start, you’ve learned almost every aspect of the insurance industry by being on the front lines of doing it. What aspect of your training do you think you’ve enjoyed the most and why?
Rick Lindsey (RL): It’s the relationships with people I’ve done business with for 30 or 40 years. Back in the day when I met them, they were in the land of the misfit toys, which is what I call insureds when they get canceled or declined, and the standard industry says they’re misfit toys. I think at that time, prior to that, somebody wrote their insurance, took their money, and then all of a sudden, they end up canceled and in the land of the misfit toys. That’s when people kind of get reality, and you can have a good honest relationship with them. Most of those people I still insure, and I’m getting older, they’re getting older and you’re dealing with new owners of companies or the kids of the original owner. I think the trend is back to buying cheap insurance. You know, it’s just insurance. We’re not going to have a claim.
Insurers need to realize that when you’re older, like me, things happen, and if you don’t have a plan for it, life’s going to be a lot different than if you do have a plan. The relationship is the best part and the biggest wild card. If you don’t have those relationships, the lawyers are like linebackers in a football game. They can shoot the gaps. You can’t take somebody’s money. It’s like you can’t be half pregnant. If I insure your building down here in Florida, I have to give you flood. Legally I can, where before you had to buy FEMA flood primary insurance. We’ve been arguing about flood and wind for 50 years, making lawyers rich and creating confusion for insurance people and insurance buyers.
So just do it right. Do the whole job. Make happy customers and bench the lawyers. That’s hopefully what the relationships I’ve had for a long time have proven. It’s kind of like war. You need people who are going to stand and fight with you and do the right thing. That feels good when everybody does their job. As I talked about earlier, it’s like going to the Super Bowl and being on the one-yard line. You can win, but you’ve got to have a plan and a play. In most cases, you practiced it, everybody’s comfortable, or you show up like a bunch of little leaguers playing in the Super Bowl and you can’t execute and you lose. That’s not fun at all. I’ve been there, so I know the difference.
TDD: Tell us a little bit about how you built Prime Insurance, and how you got started in it.
RL: Basically, I was an agent broker, became an MGA, and then had an A-rated company give me their pen. I wrote outfitters and guides, helicopter-ski guides, rafting. My family did roofers and other classes of business. We managed the claims as a TPA. I think we’ve always had that desire to do the right thing and fight frivolous lawsuits. I think we were seen as stupid. “You can’t fight that. This is when you should settle.” Early on I wanted to start an insurance company. I started trying to raise $20 million to form a syndicate on the Illinois Insurance Exchange because that was the easiest way to get in 40-plus states and you really need to be in all 50 if you want to do a national program.
It became obvious that you spend all your time trying to talk companies into doing what you want. Then on the claims side, you’re always trying to talk lawyers into doing what you want, or doing the right thing, in my opinion. As an agent or broker, an employee of someone else, you can’t tell people what to do. So owning the insurance company was the solution for me.
TDD: You focused on what the industry might call hard-toplace risks. What attracted you to that aspect of insurance that others seem to avoid?
RL: I think in anything where people need a solution, they’re more realistic. Either they’re a really good partner because of the need for a solution, or they’re not as good a partner as they want to represent. You learn that through experience. If some lawyer sues you frivolously, and I mean I recall saying to one guy, who said, “The lawyer says we should settle this case because we could lose.” “Well, is the lawyer risking any of his money?” I said, “I’m risking my own money and you’re risking your own business.” At some point, we actually have to make the decision and stop listening to the lawyers. I think homeowners in Florida, if you polled them, obviously make unhappy customers. That’s why people go to lawyers. Yet, where do you go when a lawyer makes you unhappy? There is no place to go. I’ve tried to hire lawyers to sue lawyers, but they don’t do that.
We’re at a disadvantage. If you could poll people who were involved in an auto accident down here or had a homeowner’s claim and they would be honest with you about how long it took, how much time was sucked out of their lives going to a chiropractor or being deposed, and still getting a bad result and only so much money, most plaintiffs would say they didn’t end up where they thought they were going to
I remember when Lloyd’s used to say property was short tail. It’s not short tail anymore because litigation starts probably two or three years after most storms. It doesn’t happen initially. The lawyers let it build up, and people start getting mad at their insurance company and then they start advertising. After Katrina, I had 1200 claims, which is where I cut my teeth on property insurance. That’s how I know how to do it right. When you write it, you’ve got to give them everything they need. When you have to talk about a claim, and they get a mudslide, you pay them, but they’re not going to be able to build back there. The plan’s got to be to go somewhere else and relocate. This is going to be a long, litigious thing where you see the county, the builders, and everyone getting involved.
Most companies exclude mudslide. As an insurance consumer, I wouldn’t like that. I would be shocked. I’d say to homeowners that your policy ought to do the whole job and we really shouldn’t be looking at government to be the ones who pay. I was talking to somebody yesterday, they’re like, well, FEMA pays whatever. That’s a bad precedent, too. Do you think the government’s going to be a good solution for anything? I don’t. I think it’s something the government ought to look at in the insurance industry and say, “You do the job or don’t take people’s money, and don’t count on Federal Flood.” You have a $5 million house and you get $2 million Federal Flood and then you buy excess flood. How do you think those three policies are going to work together? It’s not going to end up in a place where anybody’s happy. We’ve been seeing it for 50 years. It’s not like this isn’t a reoccurring thing.
TDD: A little bit of history — what was your first job as a teenager?
RL: I worked in equipment, old-fashioned equipment, you know, where they rented chainsaws and pumps and lawnmowers. I washed the equipment.
TDD: What did you learn from that?
RL: I apply it to insurance. You have to make sure that equipment’s serviced, dried, and documented. Do you want to rent chainsaws? That might be a little bit dangerous. I remember when Lloyd’s used to say property was short tail. It’s not short tail anymore because litigation starts probably two or three years after most storms.
If you do, you have to plan ahead for the bad day when somebody cuts off of a limb or wounds themselves. What’s the plan? How are we going to manage that? I think it’s all proactive. Insurance is reactive. Insurance tells you, don’t call him, don’t go see him at the hospital, which is exactly what you would do if you didn’t have insurance. If you ran a little store like that, you’d know the guy, you’d go to the hospital, make sure he was okay and stay in touch with him. If he said, “You owe me a million dollars,” you’d say, “Well, if I had it, maybe I’d give it to you, but I don’t have it.” With insurance, it’s like, “Yeah, I got insurance — sue me. Maybe they’ll pay you.” I’m not sure people actually think about it the way that they should.
TDD: Are there people in your career that you would characterize as mentors that you learned something from?
RL: There’ve been many. Roger Day was the former insurance commissioner in Utah when I was a young man. He was the youngest insurance commissioner ever appointed in the United States. I think he was 28 years old. Obviously, my dad taught me a lot. He didn’t want to be a risk-taker. Then the guys I talked about before on my Board. I always say my job is to lead my claims guys and lead my underwriters with the fundamentals and common sense.
TDD: You’ve made it clear that hard-to-place risks could be created by a lack of understanding by stereotypical insurance industry behavior, maybe an unwillingness of the industry to learn and study what they’re calling “hard-to-place.” What have you seen in these hard-to-place risks that make them not so hard to place?
RL: I guess it’s having a partnership and a plan where you’re confident you can execute. We now see Assault and Battery as an exclusion that’s being added. Carriers start out with a package like an ISO form. As it grows and develops, and, say it’s liquor liability, they tend to exclude the liquor and want you to buy that separately on a standalone basis. That’s been the trend for 50 years. As you identify the really hard-to-place portion of the risk, you tend to carve it off, and try and keep the good. I think that should be totally in the past. If you insure a hotel or you insure a dentist and you start excluding sexual abuse and molestation, that’s actually called underwriting, right, so, you don’t want to underwrite it. You want to exclude liquor or Assault and Battery or sexual abuse or the firearm because you don’t want to deal with it.
All this is about how we should be proactive, but insureds don’t want to report claims. We’ve encouraged them not to. Why don’t they want to report claims? Because they want a clean loss run where they can get a cheaper rate next year at renewal. So insureds need to be a lot more focused on what they’re buying and how it’s going to work. I tell the story about a Porsche in your driveway. You’re sitting there looking really good and I say, “Hey, let’s go for a ride.” You say, “Oh, it doesn’t run.”
Do you want a Porsche that actually runs? You don’t really look that cool sitting in your driveway every night not driving it around. Performance is something that, as insurance professionals, we have to say, “Look, you want me to write your homeowner’s policy in Florida for the same price you used to pay?” That company’s bankrupt, and can’t pay their claims, right? Part of the problem is they didn’t charge you enough money, and they didn’t provide you the right coverages. That is our responsibility as insurance professionals to make sure we can make happy customers. Customers need to realize they have to pay the right price. It’s not our job to make insurance affordable for people that can’t afford what they want. Like a Ferrari: if you want a Ferrari, you better be able to afford the Ferrari. It’s no one’s job to lose money so you can afford a Ferrari.
TDD: In terms of success, you have been quite successful. Whether it’s property, casualty, life, health, whatever it might be, what are your thoughts on younger people and why they should consider insurance as an exciting, maybe even a fulfilling, career?
RL: It’s a fun, exciting career. Obviously, you can do anything. It’s not like there’s anything holding you back. You don’t need to go get a degree. If you have one, great. You should be able to parlay that into a great career. I think most people need to work hard. That’s how you get lucky. That’s how you learn.
TDD: Do you see any insurance issues today that might not have existed 10, 15, 20 years ago, the problems and challenges in the insurance business we didn’t have before?
RL: One of my biggest disappointments is I occasionally see some fairly experienced insurance professionals retiring now or they’re now on boards. My focus is that as an industry, we need to step up and do the right thing and provide real solutions.
TDD: I noticed in one of your posts on LinkedIn, you talked about your “Go Team” on claims. What inspired that idea? How do you recruit and train people for that?
RL: I ask employees, “Do you want to answer calls after hours?” If you do, that’s valuable to me, so we have a phone tree in every department. I’m on the bottom because as the owner of the company, I want to know when you have a claim and my people don’t answer it. I want to answer it. That’s what I would expect. As a consumer, I pay the insurer. Don’t tell me you’re closed over the weekend. If I send you a claim or I send you an email, don’t send me an automatic response that says I’m out of the office for a week on vacation. I don’t think anybody really cares that you’re on vacation. They called you because they need something. I don’t force anybody to be on the Go Team. It’s valuable to me, it’s valuable to the clients. They volunteered to be on that team. Then, when what can happen does happen, I want my Go Team in there.
TDD: I know you’re a licensed private rotorcraft pilot. Tell us what attracted you to helicopters and some of your other hobbies?
RL: When I was young, I’d go skiing with the helicopter ski guides. We’d go up to the top of the mountain in a helicopter. That’s been a passion of mine ever since then. Before we had the insurance company, I probably did $5 million in premium, so I really didn’t have the wherewithal to learn to fly or have a helicopter. Back then, it was really hard to learn to fly helicopters. Most people learned in the military because there weren’t a lot of helicopters in the private sector. Now there are helicopters everywhere. Robinson helicopters — they’ve made more helicopters than anybody else. It’s made it a lot more affordable. Where helicopters used to be out of reach for me and most people, now it’s a lot better. I enjoyed flying helicopters. I have one in Utah and one down here in Florida.
TDD: I’m going to close out with kind of a lightning round of personal preferences, if you don’t mind. Your favorite meal?
RL: Mino in Naples, Florida, is our favorite restaurant. They have good Italian — we like their meatballs.
TDD: Favorite snack?
RL: I would have to say hot tamales.
TDD: Your favorite movie?
RL: I think “Pulp Fiction.” That’s a good one.
TDD: Cat or dog person?
RL: I’m a dog person. Again, I’m not just any dog person. I like hunting dogs. I guess I move around too fast to have a house dog or a cat because they’re work. We have Labrador Retrievers that go pheasant hunting and bird hunting with us. Those have always been my favorite.
TDD: Any last thoughts on anything I should have asked and didn’t?
RL: We’ve known each other a long time and had a lot of discussions over the years, and I think it’s an exciting time in our business. There’s been lots of turmoil and lots of bad press going on, but I think the solutions are there. We need to communicate. I think regulators need to communicate more. And I think rating agencies, too.
Prime Insurance Company has been assigned a Financial Stability Rating® of A′′ (A Double Prime), Unsurpassed, from Demotech, Inc.
Demotech, Inc., is a financial analysis firm that provides Financial Stability Ratings® (FSRs) for Property & Casualty insurance companies, Title underwriters, and other risk-bearing entities.